The Assessment and Collection Divisions of the IRS are strictly separated, as are their respective functions. The Assessment Division determines which tax returns will be audited, performs all audits function, responds to audit appeals, and defends audit results in U.S. Tax Court. The Collections Division has nothing to do with determining or negotiating the amount a taxpayer owes. Collections’ function is solely to collect the taxes Assessment has determined a taxpayer owes. Collections’ negotiates Installment Agreements for taxpayers to pay off what’s owed, Offers in Compromise which sometimes erase some tax debt, and issues levies and liens to collect from taxpayers who don’t pay voluntarily. By congressional design, there is little interaction between the two divisions.
The Assessment Division is mandated to not consider a person’s ability to pay when determining the amount of tax a taxpayer should pay. Assessment is primarily a law enforcement agency, tasked with determining the correct and lawful amount of tax taxpayers should be paying. Congress wants everyone to pay their fair/legally-mandated share – no more or less – to preserve the credibility of the IRS and Congress’ power to tax U.S. citizen. Implication?
Assessment Doesn’t Care If Taxpayer Can’t Pay Their Tax; Ability to Pay Isn’t Relevant, Fairness Is
Once an audit or tax court case are completed and a final determination of taxes owed is issued by the Assessment Division, the file passes to the Collection Division, with the power to place levies and liens to satisfy your tax debt. Implication?
The Time to Challenge & Change Amount of Tax is When the Case is Still in Assessment Division
In contrast, the only thing the IRS Collections Division is interested in is being paid. Collections will not relitigate how much a taxpayer owes; they aren’t set up for that. When a file is passed from Assessment to Collections, all computations on what’s owed have been done and all challenges have been addressed. Collections is mandated to collect the amount Assessment says a taxpayer owes. Period.
And Congress has given the Collections Division of the IRS enormous power to do just that. Collections will negotiate payment plans but, if a taxpayer fails to make payments, then it will collect by force. Implication?
The Collections Division Has the Legal Power to Levy On Wages, Bank Accounts, Rental Income, Dividends, Commissions & Royalties
Unfortunately, some people are so scared of IRS notices, or their inability to full pay the taxes they owe, that they shut down and ignore IRS attempts to collect altogether. Don’t be one of them. Why?
Ignoring Notices From Collections Doesn’t Make the Problem Go Away – It Makes it WORSE Because Garnishments Will Be Too High and Levies Are Rarely Reversed
If you’re interested in all things IRS (as I am), then have some fun with this treasure-trove of statistics on the agency. If you’re having trouble either with an audit in the Assessment Division, or with the tactics of the Collections Division of the IRS, call me.
October 25, 2022